Mewa lal borrowed Rs. 20000 from his friend Rooplal at 18% per annum simple interest. He lent it to Rampal at the same rate but compounded annually. Find his gain after 2 years.

Given,


Principal= Rs. 20000


Rate = 18% p.a


Time = 2 years


Hence,


Interest that Mewa lal has to pay =


And,


Interest paid by Rampal to Mewalal = Compound interest =


=


Gain of Mewa lal = Rs.(7848 – 7200 ) = Rs. 648


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